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Facebook Q3 Revenue Surges - Beats Expectations

November 2, 2017

Facebook reported financial results for the quarter ended September 30, 2017. The social media company noted adjusted EPS of $1.59 per share, which was more than the $1.28 per share investors sought. Facebook delivered revenue of $10.3 billion, with only $9.84 billion being expected.

However, 2018 operating expenses are forecast to rise between 45 percent and 60 percent.

"Our community continues to grow and our business is doing well," said Mark Zuckerberg, Facebook founder and CEO. "But none of that matters if our services are used in ways that don't bring people closer together. We're serious about preventing abuse on our platforms. We're investing so much in security that it will impact our profitability. Protecting our community is more important than maximizing our profits."

Third Quarter 2017 Financial Highlights


 

Three Months Ended
September 30,


 

Year-over-
Year % Change

In millions, except percentages and per share amounts

2017


 

2016


 

Revenue:


 

 

 

 

 

   Advertising

$

10,142


 

 

$

6,816


 

 

49

%

   Payments and other fees

186


 

 

195


 

 

(5)

%

Total revenue

10,328


 

 

7,011


 

 

47

%

Total costs and expenses(1)

5,206


 

 

3,894


 

 

34

%

Income from operations(1)

$

5,122


 

 

$

3,117


 

 

64

%

Operating margin(1)

50

%


 

44

%


 

 

Provision for income taxes

$

529


 

 

 

 

 

Effective tax rate

10

%


 

 

 

 

Net income(1)

$

4,707


 

 

$

2,627


 

 

79

%

Diluted Earnings per Share (EPS)(1)

$

1.59


 

 

$

0.90


 

 

77

%


 

 

(1)

In the fourth quarter of 2016, we elected to early adopt Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09). We were required to reflect any adoption adjustments as of January 1, 2016, the beginning of the annual period that included the interim period of adoption. As such, certain financial highlights data for the three months ended September 30, 2016 had been adjusted to reflect the impact of ASU 2016-09 adoption. See Note 1 Summary of Significant Accounting Policies (Note 1) in the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016 for detailed adoption information.

Third Quarter 2017 Operational and Other Financial Highlights

  • Daily active users (DAUs) DAUs were 1.37 billion on average for September 2017, an increase of 16% year-over-year.
  • Monthly active users (MAUs) MAUs were 2.07 billion as of September 30, 2017, an increase of 16% year-over-year.
  • Mobile advertising revenue Mobile advertising revenue represented approximately 88% of advertising revenue for the third quarter of 2017, up from approximately 84% of advertising revenue in the third quarter of 2016.
  • Capital expenditures Capital expenditures for the third quarter of 2017 were $1.76 billion.
  • Cash and cash equivalents and marketable securities Cash and cash equivalents and marketable securities were $38.29 billion at the end of the third quarter of 2017.
  • Headcount Headcount was 23,165 as of September 30, 2017, an increase of 47% year-over-year.

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